The crypto market has been witnessing a significant shift in dynamics, particularly in the comparison between Ethereum’s Ether (ETH) and Bitcoin (BTC). More than 19 months after Ethereum’s Merge upgrade, it is evident that Ether is struggling to keep up with Bitcoin, with the ETH/BTC price ratio hitting a three-year low at 0.044. This trend has surprised many Ethereum proponents who expected ETH to outshine Bitcoin as a more attractive investment option following the upgrade.
Despite the Merge introducing a proof of stake consensus mechanism and reducing ETH’s inflation rate by 90%, Ether’s market dominance against Bitcoin has declined significantly. The fact that ETH/BTC has dropped by 45% since the Merge is concerning, especially considering the general uptrend in the crypto market over the past 18 months. Typically, during bullish phases, altcoins are expected to outperform Bitcoin, but this has not been the case for Ethereum.
Crypto fund founder Joe McCann expressed disappointment in Ethereum’s performance compared to Bitcoin, referring to the “flippening” as a dream turned nightmare. He argued that Bitcoin is “ultrasound money” and Solana is the “global supercomputer,” while Ethereum lacks both qualities. Additionally, experts at CryptoQuant highlighted that Ether’s status as “ultrasound money” was compromised by the Dencun upgrade in March 2024, making it an inflationary currency again. This has weakened its investment thesis as a store of value when compared to Bitcoin.
Recent technical breakthroughs have enabled developers to bring unique applications to Bitcoin, such as Ordinals NFTs, Runes trading, and BitVM, making Bitcoin a more competitive platform compared to Ethereum. Moreover, regulatory challenges loom over Ethereum, with uncertainties regarding the approval of an Ether spot ETF and increased scrutiny from regulatory bodies like the U.S. Securities and Exchange Commission. This regulatory environment poses legal risks for exchanges and companies dealing with Ether and other altcoins.
The market performance of Ether reflects its dwindling dominance, with Solana experiencing a staggering 665% increase in value over the past year compared to ETH’s 61% rise. Ether’s total crypto market dominance has dropped to 15.1%, while Bitcoin maintains a dominant position at 54.5%.
Ethereum’s struggle to maintain competitiveness against Bitcoin and other emerging blockchain platforms is a cause for concern among investors and analysts. The decline in Ether’s market dominance, coupled with regulatory challenges and technical limitations, paints a challenging picture for Ethereum’s future. It remains to be seen whether Ethereum can adapt and innovate to regain its position in the ever-evolving crypto landscape.